Current account deficit rises in third quarter

Current account deficit (CAD) rose to $7.9 billion in the third quarter (October-December) of 2016-17 from $7.1 billion in the same quarter of 2015-16, the Reserve Bank of India (RBI) said on Thursday.

"Despite a slightly lower trade deficit on a year-on-year (y-o-y) basis, the CAD widened primarily on account of a decline in net invisible receipts," the Reserve Bank of India said in a statement here on the country's Balance of Payments (BoP) during the third quarter.

The CAD for Q3 accounts for 1.4 per cent of the GDP (Gross Domestic Product) as against 1.4 per cent of the GDP in the same quarter in 2015.

"Net services receipts moderated on a y-o-y basis, primarily owing to the fall in earnings from software, financial services and charges for intellectual property rights," the statement noted.

Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $15.2 billion, having declined by 3.8 per cent from their level a year ago.

In the financial account, net foreign direct investment at $9.8 billion in Q3 of 2016-17 was marginally lower than its level a year ago.

There has been net outflow of portfolio investment to the tune of $11.3 billion as against net inflow of $0.6 billion in Q3 of last year; portfolio outflows occurred in both equity and debt segments.

"Reflecting the redemption of Foreign Currency Non Resident (FCNR) (B) deposits, non-resident Indian (NRI) deposits declined by $18.5 billion in Q3 of 2016-17 as against an inflow of $1.6 billion a year ago," it said.

In Q3 of 2016-17, foreign exchange reserves (on BoP basis) declined by $1.2 billion as against an increase of $4.1 billion in Q3 of last year.

On a cumulative basis, the CAD narrowed to 0.7 per cent of GDP in April-December 2016 from 1.4 per cent in the corresponding period of 2015-16 on the back of the contraction in the trade deficit.

India's trade deficit narrowed to $82.8 billion in April-December 2016 from $105.3 billion in April-December 2015.